Marginal decrease in August US passenger traffic from a year earlier

By BA Staff

The U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS) reported that U.S. airlines carried 67.7 million systemwide (domestic and international) scheduled service passengers in August 2013, 0.1 per cent fewer than in August 2012. Domestic passengers decreased 0.9 percent to 58.1 million, and international passengers increased 5.5 per cent to 9.6 million compared to August 2012.

Total U.S. airlines' passenger traffic for the first eight months of 2013 increased 0.4 per cent 502.7 million, compared to the same period last year. Domestic passengers remain virtually unchanged at 435.3 million, while international passenger traffic increased 3.1 per cent to 67.4 million.

System-wide and domestic load factors, the proportion of capacity measured Available Seat-Miles (ASMs) vs. utilisation measured in Revenue Passenger-Miles (RPMs), remained below the all-time August highs reached in 2011, while international load factors hit record highs of 87 per cent as RPM growth far exceeded ASM capacity expansion.

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Delta Air Lines reports strong September traffic results

by BA Staff

American full service carrier Delta Air Lines reported its traffic results for September 2013. Unit passenger revenues continued the summer's strong performance, increasing 5.5% year over year. Highlights include:

• 5.5% increase in passenger revenue per available seat mile (PRASM)
• Projected September quarter per gallon fuel price: $2.98 - $3.03
• September mainline completion factor 99.9%
• September on time performance: 90.2%

The table below provides a summary of the full traffic results

	Region	Sep-13	Sep-12	Change
RPMs (billion)
*Traffic	Domestic	9.08	8.99	1.0%
	Mainline	7.36	7.22	1.8%
	Regional	1.73	1.77	-2.2%
	International	6.99	6.8	2.8%
	Latin America	1.07	0.94	13.8%
	Atlantic	3.8	3.72	2.2%
	Pacific	2.11	2.13	-1.0%
	Total System	16.07	15.79	1.8%
ASMs (billion)
*Capacity	Domestic	11.24	11.17	0.7%
	Mainline	8.96	8.88	0.9%
	Regional	2.28	2.28	-
	International	8.06	7.81	3.1%
	Latin America	1.32	1.14	15.5%
	Atlantic	4.2	4.14	1.4%
	Pacific	2.54	2.53	0.2%
	Total System	19.3	18.98	1.7%
Load Factor	Domestic	80.8%	80.5%	0.3
	Mainline	82.1%	81.3%	0.8
	Regional	75.8%	77.5%	-1.7
	International	86.8%	87.0%	-0.2
	Latin America	81.4%	82.7%	-1.3
	Atlantic	90.6%	89.9%	0.7
	Pacific	83.2%	84.3%	-1.1
	Total System	83.3%	83.2%	-0.1
Passengers Boarded	Total System	13.25 million	13.12 million	0.9%
Cargo Ton Miles	Total System	201.57 million	202.71 million	-0.6%

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Cathay Pacific July 2013 traffic results

Hong Kong based full service carrier Cathay Pacific Airways posted its consolidated (including regional arm Dragonair) traffic results for July 2013, showing an increase in passenger traffic offset by a decrease in cargo tonnage. Find the details below.

20th August 2013

Cathay Pacific Airways today released combined Cathay Pacific and Dragonair traffic figures for July 2013 that show a year-on-year rise in the number of passengers carried. Cargo and mail tonnage fell compared to the same month in 2012.

Cathay Pacific and Dragonair carried a total of 2,679,193 passengers in July – an increase of 6.9% compared to the same month last year. The passenger load factor was up 3.9 percentage points to 85.0%, while capacity, measured in available seat kilometres (ASKs), rose by 0.1%. For the year to date, the number of passengers carried has increased by 2.1% while capacity has fallen by 4.1%.

The two airlines carried 122,920 tonnes of cargo and mail last month, a drop of 1.9% compared to July 2012. The cargo and mail load factor fell by 4.4 percentage points to 60.3%. Capacity, measured in available cargo/mail tonne kilometres, rose by 6.6% while cargo and mail revenue tonne kilometres were down by 0.7%. For the year to date, tonnage has fallen by 1.8% compared to a 0.6% capacity decline.

Cathay Pacific General Manager Revenue Management James Tong said: “We enjoyed a strong start to the summer peak period, with good loads on major long-haul routes and also to the key holiday destinations within the region. However, the comparison with last year is distorted by the effect of Severe Typhoon Vicente, which had a major impact on our operations in July 2012. The Economy cabins were particularly busy last month; demand in the premium cabins was generally weaker, but in line with our expectations for the summer peak.”

Cathay Pacific General Manager Cargo Sales & Marketing Mark Sutch said: “Demand was soft out of many of the major airfreight markets last month and once again we saw tonnage and load factor dropping compared to 2012, when business was already weak. The bright spots in our network were the transpacific lanes and demand on intra-Asia routes, particular out of Hanoi and Dhaka. Europe and Japan remain two of the weaker markets at the moment."

CATHAY PACIFIC / DRAGONAIR COMBINED TRAFFIC	JUL 2013	% Change VS JUL 12	Cumulative JUL 2013	% Change YTD
RPK (000)
- Mainland China	775,166	9.5%	4,763,356	4.1%
- North East Asia	1,206,578	12.9%	7,539,802	7.2%
- South East Asia	1,279,559	6.0%	8,437,035	3.9%
- India, Middle East, Pakistan & Sri Lanka	666,415	-0.4%	4,711,537	-5.8%
- South West Pacific & South Africa	1,182,343	6.4%	8,073,930	-2.1%
- North America	2,378,062	-4.2%	15,551,810	-11.3%
- Europe	1,886,418	11.6%	10,840,134	0.6%
RPK Total (000)	9,374,541	4.9%	59,917,604	-2.2%
Passengers carried	2,679,193	6.9%	17,176,225	2.1%
Cargo and mail revenue tonne km (000)	715,127	-0.7%	4,839,502	-4.1%
Cargo and mail carried (000kg)	122,920	-1.9%	863,472	-1.8%
Number of flights	6,175	6.2%	41,197	5.2%

CATHAY PACIFIC / DRAGONAIR COMBINED CAPACITY	JUL 2013	% Change VS JUL 12	Cumulative JUL 2013	% Change YTD
ASK (000)
- Mainland China	995,472	6.8%	6,654,262	6.0%
- North East Asia	1,511,165	3.2%	9,825,641	0.9%
- South East Asia	1,561,896	0.8%	10,562,289	3.9%
- India, Middle East, Pakistan & Sri Lanka	872,564	-0.3%	6,228,611	-3.9%
- South West Pacific & South Africa	1,440,550	-1.3%	10,223,144	-6.6%
- North America	2,635,993	-6.5%	17,394,262	-13.2%
- Europe	2,008,263	4.9%	12,324,486	-3.2%
ASK Total (000)	11,025,903	0.1%	73,212,695	-4.1%
Passenger load factor	85.0%	3.9pt	81.8%	1.5pt
Available cargo/mail tonne km (000)	1,185,840	6.6%	7,792,496	-0.6%
Cargo and mail load factor	60.3%	-4.4pt	62.1%	-2.2pt
ATK (000)	2,234,229	3.4%	14,754,455	-2.3%

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Exclusive interview: Giorgio De Roni - CEO GoAir - Part 2: We first deliver results, we do not over-promise.

Continuing from part 1 of the interview with the the soft spoken CEO of GoAir, Giorgio De Roni, who has quietly turned around the Wadia family promoted airline from a rock bottom position, dismal market share, and reputation for frequent cancellations, to a top performing contender in the Indian airline industry, with some of the best performance parameters in the industry.

In the concluding part of this broad ranging two-on-one interview with Devesh Agarwal and Vinay Bhaskara, De Roni, shares his management mantras, techniques and methods utilised in the turn around of GoAir.

Q: How are things developing at GoAir and in the Indian airline industry as a whole over the past year?

Well the industry is going through a challenging period due to many issues in the market.

Certainly and foremost the cost of fuel and taxation on fuel. We have recorded an increase of 7%, which is a huge increase given that fuel represents more than 50% of our total costs.

Then we have a market that I’m fully confident and sure that in the medium to long term is growing. But unfortunately in the latest few months, we have recorded a drop in respect to last year, and that is a big concern in the short period.

We have some infrastructure bottlenecks and again this is penalizing airlines in India.

That said, I remain confident in the growth of the Indian aviation sector. We might require some revision of the regulatory environment which is a little bit old fashioned. If I’m not wrong the base of the legal framework is dated 1934, so even before the Chicago Convention.

I feel that some commitment from the government to revise and improve efficiency in the system is necessary. I feel confident that all stakeholders will be able to deliver us such an environment.

In my view, a country with 1.2 billion people should have a much stronger aviation sector. Definitely there is an opportunity to create a hub in India, and there is probably also a space for more than one hub. But we need some efficiency in all of the systems.

Q: Till a little more than a year ago, GoAir did not enjoy the best reputation in the industry in terms of dispatch reliability. In the last 1.5 years, that has turned around literally 100%. GoAir ranks, right at the top in terms of least cancellations and best on-time performance. Can you share with us what were the issues confronting GoAir and some of the steps you took to solve them when you joined the airline?

Well I think that quality to customer is one of the pillars of any airline, and we are committed to deliver value for money. Definitely I am aware that in the past, GoAir was suffering in terms of on-time performance. We are now averaging around 90%. And notwithstanding the high on-time performance, we also have high aircraft utilization, because in July we achieved 13 block hours per aircraft per day, which is remarkable for a narrow-body airline.

I think that the only thing that I am trying to reach within the organization is trying to deliver consistent strategy, and a consistent approach throughout the management team and down to the front line. We are investing hugely in terms of training and hugely in processes and procedure. We were IOSA approved [IATA Operational Safety Audit] at the end of 2010. Since it is a 2 year approval, we are now going through the renewal of that certificate. All these aspects are contributing to keep our quality and standard of performance high.

IOSA? We didn’t know that you had undergone IOSA. We only knew that Air India had undergone IOSA.

Well, one of our characteristics is not to overpromise, but first to deliver the result and then communicate. Sometimes my shareholder [Wadia family] blames me, saying that we [GoAir management] should be more proactive in communication.

Well my view is that we have to communicate only what we are able to deliver. And definitely IOSA is a good achievement.

But in the end, does a passenger choose GoAir for being IOSA certified? No I don’t think so.

I think that it is more important to deliver on-time performance, and good service, both on-board and on the ground. And that is why we are investing significantly in training.

Q: You mentioned that GoAir is achieving 13 hours aircraft block utilisation time, That is almost 20% or 30% more than IndiGo or SpiceJet. You appear to have probably the best aircraft utilization in the country?

Well last year we received an award by Airbus for being the best operator of the A320 in whole of Asia Pacific, Middle East and Africa in our fleet size. [Editor's note: A320 behemoths AirAsia and IndiGo are in the same geography]

And this is remarkable because of course the higher utilization continues to keep fixed costs more efficient , but also it is remarkable because it is accompanied by a very good on-time performance.

Q: How long are you looking at keeping the same level of aircraft utilization?

I hope that as soon as we get approval, we can start operating on international flights and increase the aircraft utilization by adding some flights at night. Of course on a daily basis we need to carry out maintenance checks on all the aircraft. And these keep the aircraft grounded for 3.5~4 hours every day, so the limit for the utilization is 20 hours.

We have a turnaround time of between 25 and 30 minutes depending on the size of the airport and efficiency of the airport in providing turnaround services. And that’s the limit I cannot go beyond.

Because our first departure is at 05:15 and our last arrival is at 01:00 the following day. Of course not all of the aircraft have such an intensive utilization, but we manage to have a pretty good utilization.

Q: So does this high utilization change the timeline on heavy maintenance checks for the A320s?

We do have C-checks. Another policy of the company is to keep the fleet as young as possible, because this brings efficiency in maintenance and efficiency in fuel consumption, and a good product to our customer. It means that C-checks. Yes we have undergone 8 C-checks for the fleet. These keep the aircraft grounded for around 3 days. We outsource the C-check maintenance. We also have engines updated but considering that we have spare engines, the high utilization is not as much of a concern.

Q: Many Indian carriers are moving to the concept of "power by the hour" with engine manufacturers. Is GoAir using this business method?

[Editor's note: In this business method, airlines agree to pay engine manufacturers a unit price per hour of usage of the engine. The manufacture is then responsible for the performance and maintenance of the engine.]

We do not do so currently, but we are exploring this method. If it saves us money and helps us improve our despatch reliability we will consider it most strongly.

Q: Can you share some of your operational numbers? What are your average number of flights per aircraft per day?

We operate roughly 100 nonstop flights, but the network is constructed to offer as many “via” [connecting] opportunities as possible, particularly via Delhi and via Mumbai. And we carried roughly 3.5 million passengers last year and we have a target of 5.5 [million]. Why? Not only due to the increase of aircraft, we grew capacity by 22% as well.

Q: So you will be targeting growth up to 5.5 million passengers this year?

Yes 5.5 million. Due to increasing capacity by 22% and a higher seat factor. We also slightly increased the productivity by 15 minutes – which is peanuts. But at the end of the day, we can deliver some positive results.

Q: How many rotations do you achieve on average per aircraft per day?

We achieve 7.6 legs per aircraft per day.

[Editor’s Note: Mr. De Roni clarified that he meant 7.6 one way flight segments per aircraft per day.]

Q: Can we ask you for CASK or RASK numbers? (Cost per Available Seat Kilometre, Revenue per Available Seat Kilometre)

Sorry No.

Q: You mentioned the enhanced connectivity that you are looking at through Delhi and Mumbai. Looking forward, how much do you want to grow connections? Will it play an increasing role in the business model or will the primary focus still be point to point connections (P2P)?

Well the main focus will continue to be on point to point, but definitely connectivity might increase without diluting the overall revenue. Furthermore, we also must consider that due to some infrastructure bottlenecks, it wouldn’t be easy to add additional slots in Mumbai or at peak times in Delhi. So we also have a strategy to increase our presence in other areas of the country. We are already relatively strong in the Northwest; in Jammu and Kashmir we are the market share leader in Srinagar. We have recently deployed second aircraft nonstop at Bangalore Airport and the January A320 delivery will be most probably deployed in the South of the country, bypassing both Delhi and Mumbai.

Q: What do you see happening in Mumbai with regards to an integrated terminal? Will it be something similar to Delhi where you have an LCC terminal and a separate integrated terminal.

First of all, I am not Indian and I am not particularly able to forecast Indian decisions. And even if I am able to forecast, since it is sometimes a frustrating experience, I prefer to keep to what is the final the result.

Because media coverage is unpredictable – one week they say that FDI will be approved by Friday, the next Saturday, it is next month, and the next month, it is in a few months time.

So I have the habit of let’s see what happens and planning consequently.

Q: The reason we ask is that if in Bombay they structure the integrated terminal similar to Delhi, will the cost structure be similar to Delhi?

Yes. And it will create inefficiencies in the cost structure if we have to share activity between two terminals. So I do hope that this kind of consideration will be analyzed before any sort of decision is made.

[Editor's note. Please see part 1 of this interview where Mr. De Roni explains how high fees are impacting Delhi airport with reduced traffic]

You recently asked the DGCA to grant you a waiver from the 5-year and 20-aircraft rules for international flying. How confident are you in receiving a waiver, and would this signal a shift in strategy towards more international flying?

No, the core business will remain domestic. I personally see a strong potential for more growth domestically, considering that only 60 million passengers travelled by air last year out of 1.2 billion people.

If there are opportunities to fly internationally, I feel relatively confident to be authorized to fly internationally.

We already have, as you know, the 5 years of experience required, but we are flying less than 20 aircraft. I do not see why foreign airlines are allowed to fly international flights to India with just 1, 2, or 3 aircraft and Indian carriers are not allowed.

In my view, allowing GoAir to fly international, will increase opportunities for employment, flows of currency and tourism, and will serve the economy of the country better, and at the end of the day, it will create a dynamic competitive environment to the benefit of the final customer.

[Editor’s Note: Just to give some examples of this disparity. Avia Traffic Company, an airline with 5 aircraft that is banned in the EU, is allowed to operate in to India. Bhutan's Druk Air with just 3 aircraft, and several sketchy Afghan airlines with very small fleets, operate non-stop international services into Delhi? Yet GoAir with its now sparkling reliability and safety record is not allowed to do so?]

Q: Looking at your network, Mumbai and Delhi seem to be roughly equal in size. Will you increase in Delhi?

We are slightly more present in Delhi, historically due to a lack of slots in Mumbai. But definitely also due to the fact that the cost in Delhi has increased greatly. Thus the expansion plan will mostly be outside Delhi.

Q: One thing we’ve noticed is that the bulk of the expense at Delhi Airport seems to have occurred on Terminal 3. Yet GoAir, SpiceJet, and IndiGo passengers, who do not use T3, are made to pay fees for T3. Your comments?

Unfortunately, this is the common approach to airport development. And with this kind of approach we have weaknesses in the efficiency of the system. We have to survive anyhow.

Thank you sir for the revealing details. It was a pleasure.

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Infographics: April Data for the Indian Airline Market

The image above shows the load factors at each of India's airlines. Considering that Kingfisher has shrunk so much, it is surprising that their seat factor has not elevated past its pre-downsize levels.

The image above shows on-time performance for April. Two interesting things to note about the data. First, Kingfisher's OTP has come back down to earth. In earlier months after the downsizing, Kingfisher had recorded an OTP of up near 90% but this appears to have been an outlier caused by too many cancellations at Kingfisher. Also interesting to note is GoAir's superb performance. We have personally reviewed GoAir's schedule, and it is heavily concentrated on rush hours in the Metros; I wonder how they manage to outstrip their competitors who have a more balanced schedule?

Market Share data is pretty much as expected, though IndiGo continues to encroach on Jet Airways' position at #1. To give these figures a bit of color, overall domestic traffic figures were 5.1 million for the month, meaning that Jet Airways and IndiGo each carried more than 1 million passengers in April. It's also sad to see Kingfisher as a shell of its former self, stuck in last place - almost the opposite of Gordon Bethune's book "From Worst to First - Behind the Scenes of Continental's Remarkable Comeback"- at Kingfisher they went from First to Worst.

And finally, cancellations and complaints. Air India was predictably atrocious in the cancellation department (and this will only get worse with the IPG strike in May), but held up surprisingly well in the Passenger Complaints department. IndiGo and GoAir on the other hand performed the worst; one has to wonder if under-staffing has become an issue at these two frugal carriers.

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INFOGRAPHIC: Three years Passenger Load Factors and On Time Performance 2009~2011

In parliament, the Indian civil aviation minister Mr. Ajit Singh released the historical information on the passenger load factors and the on-time performance for domestic operations of Indian carriers for the last three years i.e. from January 2009 to December 2011.

The annual average for each airline is given, as is the average for all airlines for a given year, average for each airline over the three years, and an industry average of all airlines across the three years.

There are some interesting observations to be made, and we will welcome your views by means of a comment. Consider it, a quiz of sorts, did you catch the subtleties?

The opening question we would pose to you - with your knowledge of the Indian airline industry, does this data look accurate? If not, where do you see possible errors?

Go ahead, we are awaiting your comments.

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